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The simplified regulations of GIFT City bundled with various tax & other advantages offer an inviting ecosystem making it a promising destination for both local and global investors.
GIFT City has following features:
1. It is Unified Regulator & has Single Window Clearance
2. GIFT City is a Special Economic Zone(“SEZ”)
The SEZ is created to encourage exports and foreign investment especially for multinational corporations. SEZ offers benefits to the businesses operating in this zone, including duty-free imports and exports, easy regulatory processes, tax benefits. GIFT City is the first IFSC in India and to make it all the more alluring and enticing the Government of India also declared it as a SEZ.
3. Its a Deemed Foreign Jurisdiction
GIFT IFSC has been designated as a foreign jurisdiction of a non-resident zone under the FEMA Regulations enabling affability for carrying out foreign exchange transactions in liberal manner. The entities setup in the GIFT IFSC can transact in, retain, repatriate the foreign currencies without limitations which are otherwise applicable to the mainland India.
4.Tax Benefits in GIFT IFSC
- 100% tax exemption for 10 consecutive years out of 15 years
- Minimum Alternate Tax (MAT) at 9% instead of 18.5% of book profits for companies set up in IFSC. No MAT is applicable if the company opts for the new tax regime.
-Interest income paid to NRI’s for money lent to IFSC units is not subject to taxation in hands of investor.
-Transfer of securities listed on IFSC exchanges by a non-resident is not considered a taxable transfer hence exemption from Capital Gains.
-No GST on transactions carried out in IFSC exchanges.
-Exemption for investors from securities transaction tax, commodities transaction tax, and stamp duty for transactions conducted on IFSC exchanges.
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Conditions to fulfill for claiming deduction under section 80GG:
- You are self-employed or salaried
- You have not received HRA at any time during the year for which you are claiming 80GG HRA component should not form part of your salary to claim 80GG.
- You or your spouse or your minor child or HUF of which you are a member - do not own any residential accommodation at the place where you currently reside, perform duties of the office, or employment or carry on business or profession.
- In case you own any residential property at any place, for which your Income from house property is calculated under applicable sections (as a self-occupied property), no deduction under section 80GG is allowed.
- You will be required to file Form 10BA with details of payment of rent.
Eligible Amount of Deduction:
The lowest of these will be considered as the deduction under this section
- Rs.5,000 per month
- 25% of the total Income (excluding long-term capital gains, short-term capital gains under section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG).
- Actual rent less 10% of Income
Do you stay in a rented house?
Section 54F:
For individuals and HUF, who invest the whole
‘Net’ sales consideration received from sale of
‘long term capital asset’ (except house property) into buying a house property one year before, or two year after the sale of capital asset or construct a house property within 3 years of such sale then the capital gain is not taxable.
However, if part of sales consideration is invested in buying the house property then proportionate capital gain is not taxable and remaining is taxable.
Please note : maximum Exemption allowed is upto Rs 10 crore.
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A long-term capital gain is the gain stemming from the sale of a qualifying investment that has been owned for longer than 12 months at the time of sale.
Any long-term gain made from equity investments over and above Rs. 1 lakh in a financial year is taxable at 10%.
Say for example, you invest Rs 1 lakh in shares today. Say In X number of years your corpus becomes 15 lakhs. Now, generally you’d have to pay tax on gain of Rs 14 lakhs. But if you practice tax harvesting, you book your gains before it reaches 1lakh, and then invest in the shares again. And repeat this cycle. This way your gains would be exempt.
Disclaimer: kindly practice this considering the market conditions are favourable.
Sell and buy only when you’re sure that you’ll be able to buy at the nearest price.
Also gains of 15 lakh in 15 years is just for dramatic representation, kindly don’t assume it to be normal returns
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Under Section 54 the IncomeTax Act, an individual or HUF selling a residential property can avail tax exemptions from Capital Gains if the capital gains are invested in purchase or construction of residential property.
The conditions that need to be satisfied :
Asset must be classified as a long-term capital asset.
- The asset sold should be Residential House.
- The seller should purchase a residential house either 1 year before or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller will have to construct the residential house within 3 years from the date of sale/transfer.
- The new residential house should be in India.
The amount of exemption under Section 54 of the Income Tax Act for the long-term capital gains will be the lower of:
-Long Term Capital gains arising on transfer of residential house, Or
-The investment made in purchase or construction of a new residential house property. Hence, the balance capital gains (If any) will be taxable.
And the exemption will limit to Rs 10 crore
If the new house is sold within 3 years from the date of purchase or construction, then the exemption claimed earlier under section 54 shall be indirectly taxable in the year of sale of the new house property.
If you are not able to utilise the amount within time limit then you can deposit it in Capital gain account scheme by government before filing income tax return or 1 year of sale whichever is earlier
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